US corporate earnings flat; Japan eyes deeper negative rates; China growth slows; Brexit shambles continues; AU banks shun clients with AfterPay; UST 10yr yield at 1.75%; oil and gold little-changed; NZ$1 = 63.9 USc; TWI-5 = 68.7

US corporate earnings flat; Japan eyes deeper negative rates; China growth slows; Brexit shambles continues; AU banks shun clients with AfterPay; UST 10yr yield at 1.75%; oil and gold little-changed; NZ$1 = 63.9 USc; TWI-5 = 68.7

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Here's our summary of key events over the weekend that affect New Zealand, with news the US corporate earnings season is in full swing. Last week 488 companies reported Q3 results on Wall Street and tomorrow another 368 will report on that day alone.

Wall Street ended last week up a marginal +0.7%. That Q3 earnings season isn't generating much enthusiasm so far. Shanghai ended lower by -1.9% while Hong Kong was up +0.7%. Tokyo was the Asia star, up +3.4%. The NZX50 rose +1.3% and the ASX200 rose +0.6%. European markets all ended they week on a downer.

In Japan, they have negative interest rates at the official level, but their central bank explained overnight that they can "certainly" lower them further to support a weakening economy. The current market speculation is that the Bank of Japan will go further into negative-rate territory when it meets next week.

China's Q3 GDP growth downshifted to +6.0%, and below the expected +6.1%, itself lower than the Q2 rate of +6.2%. In an economy the size of China's, a 0.1% miss is still a lot and takes it to a 30 year low. But interestingly, the main depressor was in their factory sector. Retail sales rose pretty much on target at +8.2% and unchanged from Q2 (and better than analysts expected). They reported higher industrial production, but lower fixed asset formation.

One sector still growing strongly is the food and beverage sector, which now accounts for NZ$1 tln in annual revenues, up impressively even if the recent food price rises are discounted.

And staying in China, a second province has decided to ban all peer-to-peer lenders, concluding that the risks to consumers are too high and the efforts to regulate them too costly.

In Hong Kong, tens of thousands of protesters flooded the streets again this weekend, this time targeting mainland Chinese-owned retail stores. There is no sign the anger is subsiding, nor the support for democratic reforms.

In the US, they have now imposed a 25% tariff on US$7.5 bln of selected EU goods after the World Trade Organisation ruled in its favour earlier this month on the issue of subsidies for Airbus. The EU says it will retaliate at the same level.

In the EU, the London Parliament debated the EU-Johnson Brexit deal and when it voted on it, it handed their prime minister yet another defeat; he hasn't won one parliamentary vote yet. He has asked the EU for an extension. Parliament may vote on related matters again this week.

In Australia, it is becoming clear that having a buy-now, pay-later account is toxic when applying for a home loan. Apparently banks there see it indicating irresponsible money management and a lack of understanding of credit obligations. Mortgage brokers are reporting credit-quality issues with potential borrowers who have this type of debt.

The UST 10yr yield has held its level of 1.75%, and is -2 bps lower that this time last week. Their 2-10 curve is positive at +17 bps. Their negative 1-5 curve is narrower for the week at just -2 bps. Their 3m-10yr curve has almost disappeared at -1 bps. The Aussie Govt 10yr is down at 1.13%, an overnight rise of +2 bps and a weekly rise of +4 bps. The China Govt 10yr is now at 3.20%, a +2 bps rise overnight and a +4 bps rise for the week. The NZ Govt 10 yr is now at 1.24%, unchanged overnight but up +6 bps for the week.

Gold is down -US$1 overnight to US$1,490/oz.

US oil prices are little-changed, now just over US$53.50/bbl. The Brent benchmark is just under US$59.50.

The Kiwi dollar is firm against the greenback today, now at 63.9 USc and the highest level in more than five weeks. On the cross rates we are still at 93.1 AUc. Against the euro we are at 57.2 euro cents. That puts the TWI-5 at just on 68.7 which is where it was at this time last week.

Bitcoin is now at US$8,070 and a fall of -5% for the week. The bitcoin rate is charted in the exchange rate set below.

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26 Comments

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Highlight new comments in the last hr(s).

(Further to the above)

"Avoid using Afterpay if you want a home loan....In particular where it’s being paid directly from a credit card, as the way you use both credit cards and ‘buy now, pay later’ products is part of what you’re assessed on when applying for credit."

https://www.smh.com.au/business/banking-and-finance/avoid-using-afterpay...

Maybe it's a plus for the greater good - This is only a partial list of what we've lost to globalism, cheap credit and the Tyranny of Price which generates the Landfill Economy.

I'd argue that if you use Afterpay on credit card and always pay your card off in full, that actually you're showing better understanding of credit obligations than someone who does neither.

Give it a go and let me know what happens at the bank! My experience is that whoever you speak to will have little understanding of whatever you present. They will fill in the appropriate form; tick the relevant boxes and send the completed spreadsheet to a computer that will make the 'right' decisions. The days of explaining your reasons and financial activity to your long-established banker, are well and truly behind us...

Pot / kettle.

A simple 101 video of how Climate alarmist work

https://youtu.be/8455KEDitpU

https://www.theguardian.com/business/2019/mar/22/top-oil-firms-spending-...

Whatever. Deny that your species is overshot, and is over-drawing at planet-taxing levels if you must.

The rest of us are looking at how we can hand Spaceship Earth on to future generations. In a functional form.

No idea how you read all of that into my beliefs, unlike yourself I do not believe we should wipe out the human population.
The earth will go and has gone through many hotter and colder periods, most of us correlate that to the natural cycle of the sun.
I'm not sure anyone would not advocate for better environment.
Would love to read all the magical things you are doing though, got a detailed site where you detail your improvements ?

Seriously? Solar variation is well within 0.1% of solar output. Climate is essentially governed by the concentration of greenhouse gases in the atmosphere. This has been well understood for over 150 years. Temperatures will continue to increase until net greenhouse gas emissions revert to zero.

Are you serious.....you want the biggest green house gas water vapour at 95% to go to 0% ?
You might need to rethink the idea of having no water !

it's serious that you can't understand net emissions

oh right so your saying with CO2 green house total of 3.6% we must change mans 2% portion or 0.072% of green house CO2 to zero.

That will then solve the sun's natural cycle affecting the earth.

Hi PDK, don't mix-up global warming, CO2, with pollution and raping the planet of everything underground.
You may know my stance on the Anthropogenic Global Warming (AGW) theory.
Regardless of my point of view, it's articles like this that do upset me.
If the IPCC promoted AGW theory is correct, why do some universities have to stoop so low as in the article below.
It just give science a bad name and what's more important, people don't know what science to believe, take vaccinations for example.
It's shocking what is happening inside the way too far left leaning universities.

Sacked for speaking out about Climate Change - Professor Peter Ridd
Peter Ridd speaks on issues relating to Climate Change, his unfair dismissal and control of thought at universities.
https://www.youtube.com/watch?v=M7j75L38PlI

------------
Dr. Ridd has now won his lawsuit against those who tried to silence him.
The judgment is here, though it's quite a long read - http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCCA/2019/997.html
It would be extremely unlikely that an appeal could succeed.

If you skip to the last page you can read the conclusions of the judge in vindicating Peter Ridd.
Worth a read.

I find it a little illogical to separate the burning from the exhaust, if it's all the same to you. And we burn 100,000,000 barrels of oil a day, not to mention the coal and gas.

mistaken post.

What do you mean ? The climate report reference is from mid to late 2018 so your assertion is 4 years old is strange ?

Apologies - using my laptop in bed and I managed to get https://www.youtube.com/watch?v=6bARjABDqok&t=514s when I clicked on your link. I'll clear my comment (although I still recommend Jim Flynn's 'No Hiding Place') and watch your video which I note is a sensible 12 mins. Sorry to waste your time.

Watched the correct link. Much sense in it but the conclusion that there is a conspiracy by scientists to overthrow democracy seemed over the top. Yet again the concept of selecting time periods for graphs and the resulting projections is discussed in 'No Hiding place' and so is the way that climate change historically has been localised so assuming the world will behave as per North America is mistaken.
The argument for man-made climate change is the correlation between CO2 and average temperature being so close over such a long period (800,000 years) combined with the simple fact that our industrial society is emitting vast quantities of CO2. Clearly to date not much has happened and what has happened is often to the good - a modest increase in temperature is good for NZ, UK, Canada, Russia, etc. Those who worry about the issue (myself for one) is based on the assumption that our oceans are buffering the effects. So what may just seem like a spring day today may be the point of no return when even the death of all humans would not stop an inevitable drastic temperature rise.
A final recommendation for 'No Hiding Place': it has two messages (a) man made global warming is underway (b) politically we cannot stop worldwide CO2 emissions increasing further.

Interesting First-World 'assuming we will continue' discussion on RNZ at the moment, re gene-editing. The justification will be having to feed ever-more humans at ever-hugher levels with a hat-tip to Climate Change if it helps their argument. All the commentators seem to have incomes or histories, in the growth game.

At some stage, medical science might have to have a discussion about where it goes, ethically.
https://www.peakprosperity.com/dr_albert_bartlett/
https://www.zerohedge.com/technology/ultimate-heresy-technology-cant-fix...

Christine Lagarde Criticizes Trump's "Tweet Here, Or Tweet There" Fed Bashing

"Market stability should not be the subject of a tweet here or a tweet there. It requires consideration, thinking, quiet and measured, and rational decisions."

ECB's Draghi warns of bubble risk in the euro zone

Man who caused problem tells others who already knew there was a problem, that there is a problem! What a bunch of clowns

The old "French Strategy will defeat German tactics" argument that all intellectuals are suckers for. As if.

Watch The Seige of Jadotville. Trump is a tactician, as is Putin. They run rings around the strategists in most real situations as they are opportunistic, fast at decision making and devolve authority to the field commanders.

Lagarde is a Central Control and Command person. The mindset is why the EU has been stagnating and progressively collapsing.

EU is collapsing? When did it start? What's your ETA for the collapse to complete?

Looking forward to cheap holidays in the former EU...

it started when germany let in a bunch more weaker countries to make loans to so they could buy german goods.
its a flawed experiment that only has one conclusion, self destruction.
once the rich countries can no longer prop up the poor ones what happens then?
will germany forgive her loans so the poor ones can rebuild?
the problem has and will always be the EU dollar and each country having its own central bank, not to mention those running dual currencies.
it was set up to model the united states minus one thing, In the USA all policy and finances are governed from Washington and the states have very limited power.
are the countries in the EU ready to do the same
https://www.bbc.com/news/uk-politics-48256318
they should have done FTA's and a CER type agreement for movement and employment of the people

[Deleted. Wrong thread]

"The world is sleepwalking towards a fresh economic and financial crisis that will have devastating consequences" according to the former Bank of England governor Mervyn King...resistance to new thinking meant a repeat of the chaos of the 2008-09 period was looming....King said there had been no fundamental questioning of the ideas that led to the crisis of a decade ago...we are in a permanent period of low growth in which ultra-low interest rates are ineffective...He added that the US would suffer a “financial armageddon” if its central bank – the Federal Reserve – lacked the necessary firepower to combat another episode similar to the sub-prime mortgage sell-off.

https://www.theguardian.com/business/2019/oct/20/world-sleepwalking-to-a...

Financial Armageddon I can live with. Physical Armageddon is a little different. We can rebuild (re-set) the financial world after the crash, but the next physical war will be cataclysmic (nuclear) & hard to grow food thereafter in many places. If it came down to a choice I know which one I'd choose.